BBA Group Annual Report 2004 - BBA Aviation

DIRECTORS’ CORPORATE
GOVERNANCE REPORT
4. A Group Finance Manual details accounting policies, financial
controls and reporting procedures applicable to all reporting units.
During 2004 this manual was reviewed and updated to ensure that
during 2005 Group accounting policies align with the latest International
Accounting Standards and International Financial Reporting Standards.
5. An annual budgeting exercise is carried out to set targets for
each of the Group’s reporting units.
6. Detailed management accounts are submitted monthly to
management which measure actual performance against budget,
together with forecasts of sales, profits and operating cash for the next
three months and to the end of the year. A monthly report is provided to
the Board highlighting key issues and summarising the detailed
financial information provided by the operating units.
7. Capital expenditure is controlled by means of budgets,
authorisation levels requiring the approval of major projects by the
Group directors and by post-investment appraisals.
8. Defined procedures are laid down for investments, currency and
commodity hedging, granting of guarantees and use of treasury products.
9. A detailed matrix defines the levels of authority for the Group’s
senior executives and their direct reports in relation to acquisitions,
capital expenditure, commercial and employee contracts and treasury
matters. This matrix is authorised by the Audit Committee on behalf of
the Board and is reviewed on an annual basis. Compliance with the
authority matrix is reviewed as part of the internal audit process.
10. All significant acquisitions and disposals of companies or
businesses are approved by the Board.
11. A Group policies manual sets out policies and procedures
regarding the following: business ethics, business gifts and gratuities,
equal opportunities, competition law, legal policy, external
communications and share dealing. A bi-annual review of compliance
with such policies by Group companies is carried out and the results
communicated to the Risk Committee and the Board. Senior executives
are also required to confirm annual compliance with certain policies.
These Group policies are complemented by divisional and company-led
initiatives, including community policies. These policies were
supplemented in 2004 by the introduction of a ‘Disclosure of Unethical
Conduct’ policy which includes a 24 hour ‘hotline’ available to all
employees which is supported by a formal investigation protocol and
regular reporting to the Audit Committee.
12. A Group Health, Safety and Environmental Manual details
policies, standards and procedures which are applicable throughout
the Group. Further details are set out on page 42 under ‘Corporate
Social Responsibility’ and on our website. Annual self-assessments
are carried out at company level against Group standards. A monthly
report is prepared and circulated to the Executive Management
Committee on environmental and safety matters within all Group
companies from the internal Group HSE function and external
BBA GROUP
ANNUAL REPORT
2004
48
specialists. In addition to a formal annual review, the Board receives
regular reports on HSE matters. Senior managers’ performance and
related financial incentives are tied in part to their success against
selected annual HSE improvement objectives.
10. Shareholder Relations
The Board as a whole is routinely kept up to date on corporate governance
developments and the views of BBA’s major shareholders. This is
achieved through regular meetings during the year between the Group
Chief Executive, the Group Finance Director and major shareholders,
which are then reported to the Board as a whole. The Board also
receives formal written reports from its brokers regarding the views of
its principal shareholders following its preliminary and interim results
announcements and at other times as appropriate. During 2004 major
shareholders were invited to meet with the Chairman and Senior
Independent Director to discuss concerns they might have regarding
the Company's corporate governance practices. No such concerns
were identified at that time or have been communicated subsequently.
All non-executive directors have been offered the opportunity
to attend meetings with major shareholders. The Board considers
that its non-executive directors, including its Senior Independent
Director, David Rough, have a good level of understanding of the
issues and concerns of major shareholders, as required by the revised
Combined Code.
A programme of meetings with institutional shareholders, fund
managers and analysts takes place each year. The directors seek to
encourage a continuing dialogue. The Company maintains contact as
required with its principal shareholders about directors’ remuneration
in the same way as for other matters. The Company’s AGM is used as
an opportunity to communicate with private investors. It is intended
that notice of the AGM and related papers are sent to shareholders at
least 20 working days before the meeting. Roberto Quarta, as
Chairman of the Board and Nomination Committee, John Roques as
Chairman of the Audit Committee, and Richard Stillwell as Chairman
of the Remuneration Committee will answer questions, as appropriate,
at the AGM. The Senior Independent Director, David Rough will also be
available. Shareholders are given the opportunity of voting separately
on each proposal. The Company counts all proxy votes cast in respect
of the AGM and makes available the voting figures (for and against and
abstentions) on each resolution.
Approved by the Board on 23 February 2005 and signed on its behalf by:
SMF Shaw
Group Secretary